LVIA's 21-year, $35 million battle with developers is over

Passenger traffic at Lehigh Valley International Airport for 2015 was up more than 10 percent as of the end of November. (APRIL BARTHOLOMEW / MORNING CALL FILE PHOTO)

No one popped the cork on a bottle of champagne at Lehigh Valley International Airport, but officials say there was certainly reason to celebrate the $1 million wire transfer that was quietly made to WBF Associates on Friday.

It was the final payment on a judgment against the Lehigh-Northampton Airport Authority for taking the development group's land, ending an ugly court battle that has cost the airport 21 years and $35 million.

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Though there's still a decision to be made on interest payments that are in escrow, that last payment closes a dark era in which the future of the airport was threatened, forcing employee layoffs and the end of longstanding airport services.

The end comes with the airport on a winning streak as the number of passengers using it is rising for the first time in four years and its 2015 budget shows a multimillion-dollar profit.

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"Since the moment I got here, we've been so focused on paying this down because we knew how difficult it was going to be," said Charles Everett Jr., executive director of the airport authority, which operates LVIA. "We're ecstatic this debt is paid. Finally, we can get on with business and start growing again."

The WBF saga had a seemingly innocent start. During a meeting with officials from several townships in 1994, then-Executive Director George Doughty was laying out a long-term airport master plan that, if the airport continued to grow, called for another runway across a swath of farmland just north of Race Street.

The problem with that was WBF Associates had big plans for that land. The 632-acre, $200 million Windwillow would have 1,488 homes, tennis courts, a golf course, a driving range and walking trails.

WBF, a group of about 80 investors, sued. It argued that the airport's master plan killed Windwillow, effectively condemning the land.

WBF Associates President Marc Sznajderman said while the airport's financial struggles over the past five years have been very public, the plight of those investors has been largely unseen. Some died before getting paid, and while many were wealthy enough to wait for their money, others were middle-income people who had put a large portion of their wealth into Windwillow, he said.

"There were times when I think a lot of us wanted to jump out a window. There were a lot of sleepless nights for some investors," Sznajderman said. "But we also felt like we were on the right side of justice, and that made it easier to hang in there all these years."

Not only did then-Lehigh County Judge James Knoll Gardner rule that the airport's master plan was an "inverse condemnation," but he decided the airport was responsible for paying WBF for the entire 632 acres, and not just the roughly 230 acres the airport would have needed for the runway.

Making matters worse for the airport, he ruled the land should be assessed at residential and commercial development land values, rather than much lower farmland value.

Doughty and airport attorneys were convinced Gardner got the case wrong, so they appealed — all the way to the state Supreme Court. By the time a Lehigh County jury decided the airport should pay $10.4 million for the land, the debt had been racking up years of interest and penalties. The total tally surpassed $26 million by the time Lehigh County Judge Lawrence Brenner in 2011 gave the airport less than five years to pay.

And it wasn't just land, interest and delay damages adding up. Even as it lost in every court, the airport's legal meter was spinning to the tune of nearly $5 million during the life of the case. In all — including the legal fees, court judgment, and additional interest logged over the past five years — the WBF case cost the authority nearly $35 million.

"This never should have taken this long, but I'll give them credit for keeping with the schedule and making the payments," said WBF attorney Kevin Fogerty. "They could have kept appealing Brenner's decision or the schedule, and they didn't. Ultimately they paid."

But it wasn't easy. To cover payments due by Dec. 1 each year since 2011, the airport laid off 10 percent of its staff one year. It also canceled the airport shuttle that brought people from their cars into the terminal, and closed the economy lot that allowed people to pay less to park if they were willing to walk a little farther or wait for the shuttle.

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In addition, it deferred millions of dollars in capital projects. With the debt paid off, the airport will embark on a major paving program that will resurface much of its crumbling airfield, including the main runway, Everett said. It also will replace equipment that probably should have been retired before the judgment came.

"Some of our heavy equipment, such as plows, dates back to the '70s. We can't even get parts anymore," Everett said. "We're also going to be replacing computers that go back a decade or more."

The end of its WBF debt comes as the airport appears to be banking toward friendlier skies. After bottoming out at a 30-year low of 612,000 passengers in 2014, its passenger traffic for 2015 was up more than 10 percent at the close of November. December numbers won't be delivered by the airlines for two weeks, but it is likely traffic approached 680,000 for 2015. That's far from its peak of 1 million passengers in 2004, but it would be the most since 2012.

Its cargo traffic was up 36 percent in 2015 as of Nov. 30, largely on the strength of a deal that ABX air flies three flights a day of Amazon consumer goods into the airport. It's a deal that's allowed the hiring of 60 new workers and could net the authority more than $1 million a year.

Even before the full effect of that deal has hit the books, the authority had already posted net revenues of $3.6 million for 2015, as of Nov. 30.

"It's been a while since we've had this many positive trends happening," Everett said. "We're excited about the opportunities 2016 will bring."

Still, remnants of the WBF battle will linger for at least a few more months. Over the course of its payment schedule, the authority disputed how interest was accumulating on the debt. Airport officials argued that all the payments should have been applied to the principal of the debt, while WBF attorneys said the more traditional method of paying interest first before applying the payment to the principal should be used.

The difference of roughly $500,000 has been set aside in an escrow account for a judge to decide whether WBF or the airport gets it.

"I'd have thought they'd just want to put this behind them, but I guess it's not surprising," Sznajderman said. "Nothing about this has been easy or quick. It's been a long and winding road. We're looking forward to moving on with our lives."